Nepal and India signed an agreement for a 41-km Amlekhgunj-Raxaul petroleum pipeline, with visiting Indian Minister Dharmendra Pradhan saying its construction would be completed within 30 months.

Minister of Trade Sunil Bahadur Thapa and Petroleum and Natural Gas Minister Pradhan signed the Memorandum of Understanding for the construction of the pipeline from Raxaul (India) to Amlekhgunj (Nepal) and re-engineering the Amlekhgunj Depot and allied facilities.

According to a press release issued by Indian Embassy, Amlekhgunj has the largest petroleum depot in Nepal owned by Nepal Oil Corporation.

"Indian Oil Corporation is capable of executing the project and we expect it will be completed before the set deadline of 30 months," he said after singing the MoU.

On behalf of the Indian government, the IOC will construct the pipeline and re-engineer Amlekhgunj depot and allied facilities. The project will be completed in two phases. In the first phase, the pipeline would be constructed.

The minister suggested to the Nepalese side to extend the pipeline up to Kathmandu, adding that India would extend all possible help to Nepal in this regard.

The IOC would bear the cost of Rs.200 crore for the first phase.
A long-term contract (initially for five years, extendable for two terms of five years each) between the IOC and Nepal Oil Corporation would be in place for the project.

The government of Nepal requested for the construction of this pipeline during Prime Minister Narendra Modi's visit to the Himalayan nation on August 3-4, 2014.

Nepal Oil Corporation would contribute Rs.75 crore for re-engineering the Amlekhgunj depot.

While 39 km of the proposed pipeline lies in the Indian Territory, remaining two km is in Nepal.

On behalf of the Indian government, the IOC will construct the pipeline and re-engineer Amlekhgunj depot and allied facilities. The project will be completed in two phases. In the first phase, the pipeline would be constructed.

Nepal Oil Corporation will invest Rs 75 crore to develop additional facilities in Amlekhgunj depot.        

India exports about US$ 1.1 billion worth of petroleum products per annum to Nepal. Bulk of this volume will be transported through this pipeline. This will also ensure smooth, cost effective and environment friendly supply of petroleum products to Nepal.      

Indian Prime Minister Narendra Modi, during his official visit to Nepal had announced the building of the petroleum pipeline to Nepal. This is a major step in the direction of fulfillment of the announcement made by Prime Minister.

It may also be noted that this would be the first transnational petroleum pipeline in South Asia and will be a significant step towards Indian Prime Minister’s vision of improved regional connectivity among SAARC countries.